KUALA LUMPUR- Malaysia's ATA IMS Bhd said on Monday that findings of forced labour allegations in a recent labour audit by its biggest customer Dyson were not conclusive, and that the impact of Dyson's contract termination would be significant.
High-tech home appliance maker Dyson told Reuters last week it was ending its contract with ATA, which derives 80% of its revenue from the firm, after an audit of the company's labour practices and allegations by a whistleblower.
Dyson did not disclose the audit findings but ATA, which makes parts for Dyson vacuum cleaners and air purifiers, had said the audits found forced labour allegations, which it viewed seriously.
On Monday, ATA said in a statement it only received a summary of the audit and that auditors said they were unable to "conclusively determine whether all allegations are true or false".
The audit summary alleged poor living conditions, issues regarding zero-recruitment fees for foreign migrant workers, unethical recruitment practices by agents, use of irregular workers, concerns of retaliation, unpaid allowances and bonus during COVID-19 in 2020 and unlawful deductions for meals, ATA said.
"The company reiterates that it takes the forced labour allegations seriously and had engaged professional advisers to assist the company to review, verify and validate the audit findings," ATA said.
ATA said it would see revenue drop by 30% in its 2022 financial year and by 40% in 2023, following the Dyson contract termination.
The company expects to undertake cost-cutting measures in response to the termination of the Dyson contract, it said.
ATA also said it was taking legal advice on what its options were relating to the contract termination by Dyson.
Dyson had ended its contract with a notice period, citing insufficient efforts by ATA to address the audit findings. ATA had said it would continue to manufacture and supply for Dyson until June 1, 2022.
Shares of ATA have halved in value since Dyson said it would end its contract.
(Reporting by A. Ananthalakshmi; editing by Jason Neely and Bernadette Baum) ((firstname.lastname@example.org; Twitter: @AnanthalakshmiA;))